More than a contract

Finding the right partner for outsourcing projects is critical. John Walker explores the options.

Patent outsourcing usually involves the overall patenting process, starting upstream at planning and strategy (including searching and opinions), through filing, prosecution, registration, maintenance, downstream to enforcement. Patent outsourcing services embrace numerous activities, but largely involve three categories – administrative work, patent management, and “legal” patent services. Given such possibilities, the extent of outsourcing is dependent upon the firm’s business objectives, as a sound IP strategy should reflect the business strategy. However, outsourcing is ultimately a partnership, and in determining its scope and terms, the outsourcer’s experience and expertise is invaluable.

Benefits

The perspective of significant cost savings can be a key driver for outsourcing. However, a firm can also access key capabilities, improve quality, reduce risk and improve flexibility by outsourcing some or all patent services. As patenting can be international, firms can benefit from local expertise and global capabilities using an appropriate outsourcer with worldwide connections.

The client can also benefit by having all capabilities and talents required for a specific, highly specialized service in one place – with the outsourcer -, while outsourcing enables the firm to focus foremost on its core services and capabilities, such as R&D or business development.

Another major advantage emerges when the outsourcer provides a single point of contact for the client on patent matters such as with many other service providers (like local and foreign agents, IPOs, annuity providers).

Even though mainly large multinationals use outsourcing it can be effective for smaller firms as well – both private and public. Also, a law firm or another service provider utilizing specialized services for one or more of the above reasons will enjoy numerous benefits. Whatever the scope of services being outsourced, the client and outsourcer should view the arrangement as a strategic partnership. The arrangement should be regularly monitored and updated as business circumstances change.

Scope

Outsourcing services can be restricted to a specific service or encompass a complete suite of services effectively placing an “in-house” group outside the firm. Each component of patenting must be considered and a balance established between “one-stop-shop” or “targeted services”.

The scope of patent outsourcing activities ultimately determines the right outsourcer. The most traditional outsourced services are docketing and annuity payments. Such services are largely administrative and demand the outsourcer has appropriate IP software (eg, DIAMS). Outsourcers can also undertake relevant searches prior to any filing strategy.

An outsourcer can then assume many roles with drafting and filing of local and international applications. Today, many providers – like our firm – offer online platforms to simplify and reduce filing costs. After filing, global prosecution can be complex, and a suitably credentialed outsourcer can bring economies of scale to this expensive phase. With increased harmonization and more PPHs (Patent Prosecution Highway), it is recommended to hire an outsourcer supported by a flexible software, as they can provide cost-effective solutions at registration, such as in the case of European Patent validation.

Post-registration also requires various important activities. Recordals, like assignments or licenses, are critical for establishing and enforcing rights. When considering the complex documentation required, combined with the various country laws, outsourcing to an expert is a risk-preventive and convenient alternative.

Similarly, post-grant activities like oppositions and infringements can be advised upon or entirely managed by outsourcers with large experience in adverse matters. Even patent audits and valuations can be outsourced to a provider experienced in consulting and monetary valuation matters.

Selection

Clearly expertise – specialist and broader management – is a good starting point in selecting the outsourcer. Other questions you should ask yourself are:

Who are their clients?

How are they organized?

What is their size?

Their networks and relationship management?

Are there certified quality management systems in place?

What software do they use – is it flexible, seamless?

How is the internal communication?

Confidentiality clause?

These questions, whilst not exhaustive, highlight some fundamental criteria to be satisfied. They ultimately lead to determining what competencies and processes the firm wishes to retain in-house, and then outsource activities that partners can perform better, cheaper and more efficiently. Generally, equilibrium between quality, control and costs is important, and this is best determined by open discussions between client and outsourcer. The overriding consideration is that outsourcing is more than a contract; it is choosing the right partner with experience you can trust.

Mode of business arrangement

Outsourcing can be a simple contract for a specified service or a complex arrangement. Full-service arrangements also vary – possibly a separate management company (owned by the outsourcer) or outsourcer’s employees embedded with the client. Experiences with the separate company are discussed below. The embedding strategy is often used by patent firms to maintain other core work (filing, prosecution) with their client.

Many outsourced services are on an on-going basis, while other strategic patent services may be performed as one-off arrangements. Dennemeyer is a good example of a full-service provider that also offers IP consulting and temporary solutions on an as-needs basis to its clients.

An Australian experience

For 15 years the author managed an outsourced IP manage for a major Australian research agency possessing the countries’ largest patent portfolio. This outsourcer performed the role for the client exclusively with no other clients – with hindsight, was this beneficial to either party?

Outsourcing forced the client to develop patenting processes and related “standing instructions” to interact with internal and external players. A clear communication (and point of contact) was essential, but not always easy for a large bureaucracy, and regular reviews were necessary in order to reflect changed business strategies, organizational and senior management changes.

The entire outsourcing experienced also underlined the importance of striking a balance between administrative work and active management, thus raising an important issue: The complexity of handling a client having as 20+ Strategic Business Units with diverse strategies and patent knowledge. How far can the outsourcer manage? Who has the ultimate decision-making authority?

Other key issues raised were: does appointing and managing other outsourced functions, such as filing, database, and annuities require independence?

Summing up

The comments and observations in this article reinforce the importance of an open and clear dialogue between the partners, not simply to establish the relationship, but to enhance it – for the benefit of both parties – as experiences evolve. Outsourcing is not “set and forget” but an on-going process. Whilst the contract is a guiding element, openness and trust between the parties is paramount.

Résumé

John Walker, Attorney and Principal, Dennemeyer & Associates

John is an Australian patent and trademark attorney and principal at Dennemeyer & Associates in Australia. He holds degrees in engineering, economics and IP law, and has vast experience in patent and trademark prosecution, being specialized in energy technology, environmental and materials engineering, and assists clients in filings, prosecutions and IP strategy. Unique in the market, the international law firm Dennemeyer & Associates provides the full range of legal services relating to intellectual property rights together with the Dennemeyer Group, a premier resource for worldwide IP management services (Portfolio Services, IP Consulting, Software Solutions).

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